Here’s How To Deal With Big Markups From New Car Dealers

New car transaction prices hit another record high in August as tight supplies meet strong vehicle demand.

Buyers are now paying more than $46,000, according to JD Power, but that’s not just the average manufacturer’s suggested retail price.

Many dealers have been adding “market adjustments” to help make up for their inventory shortfall, which can run into the tens of thousands for the most popular models.

Even major brands like Kia and Hyundai have seen some of their vehicles sell for 18% above the list, according to Consumer Reports, but Edmunds said the average is closer to $700 across the industry.

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Dealers also sometimes add accessories to stock cars that can’t be removed, so it’s take-it-or-leave-it for interested buyers in a seller’s market.

However, there are ways to avoid or at least reduce these types of margins, according to Edmunds Senior Editor of Consumer Advice Ronald Montoya.

First, make sure you know how to spot them. Dealers have to post an addendum on cars showing any extra costs that aren’t on the traditional window sticker.

Along with aftermarket tuning, some things to watch out for are security systems, ceramic paint coatings, door edge guards, and nitrogen-filled tires, which most experts advise are unnecessary. for typical cars. The practice was originally used in auto racing, as nitrogen better controls temperatures in the tire under high stress.

Montoya advises looking for the same car without the add-ons, even if it means going to another state. He points out that even if he likes the accessories, they are likely to be more expensive if the dealer installs them than if he makes a purchase after he buys the car.

But while it’s hard to get a dealer to drop or lower the price of fixtures, the market fit is fair game for negotiation.

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“Dealers don’t always expect people to pay full markup, so if the vehicle you really want is market fit, try offering half the cost,” Montoya said.

“The dealer can counter, but this can be a win-win: You can save thousands of dollars, and the dealer is still selling the vehicle above MSRP.”

“Dealers don’t always expect people to pay full margin”

For patient customers looking to avoid surcharges altogether, Montoya says their best option is to order a vehicle from the factory rather than buying one from the lot.

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You’ll want to get a purchase agreement to lock in the price if you can, because a dealer may still try to add a markup on delivery if they don’t have a contract, and they’ll just sell it to the next customer willing to pay.